PUC Trims PGE General Rate Case Request But Consumer Costs Still Rise

Commission still allows rates to go up by 5.6%.

Salem-News.com

(SALEM, Ore.) - Today the Oregon Public Utility Commission issued its decision on Portland General Electric’s (PGE’s) request to raise customer rates.

The Commission trimmed approximately $26 million from the company’s initial request. However, customer rates will increase overall by 5.6% effective January 1st, 2009.

The Commission’s rate case decision increases PGE’s base rates by $121 million or 7.6%. Due to other adjustments which also take effect January 1, 2009, the change in customer rates is 5.6%.

“The Commission worked very hard to trim unnecessary expenses. While we have done a good job, I also know that the impact of this decision will be difficult for many households to absorb given our difficult economic times,” Commission Chairman Lee Beyer said.

“A significant factor for this increase is due to the cost of generating electricity, which is affected by fuel costs and electricity market prices that are beyond PGE’s control,” the Chairman added.

Power costs related expenses account for $95 million of the $121 million increase.

The monthly bill of a typical PGE residential customer using 900 kWhs of energy monthly will increase by $5.38, or 6.1%, from $88.21 to $93.59.

The average small commercial customer's monthly bill will increase about 3.9%. Rates for industrial and large commercial customers will increase by approximately 5.5%.

The chairman praised the combined efforts of Commission staff and customer groups such as the Citizens’ Utility Board and Industrial Customers Northwest Utilities in paring down PGE’s original request of $147 million.

The request included general day-to-day operating expenses such as salaries, insurance, pensions, taxes, financing expenses and new employees.

It also included power costs, such as natural gas and coal to generate electricity and energy bought from other sources on the wholesale market to serve its customers.

The Commission reduced PGE’s original requested increase for several major expenses, including:

• Workforce and Wages and Salaries, a reduction of $15.8 million.
• Corporate Incentives, a reduction of $8.1 million.
• Operation and Maintenance Expenses, a reduction of $8.5 million.
• Abnormal plant maintenance costs, a reduction of $5.6 million.
• Property Taxes, a reduction of $3.0 million.
• Capital additions that will be addressed in a 2009 rate case, a reduction of $11.0 million.
• The Commission set the overall rate of return at 8.334%, a reduction of $12.9 million from the initial request of 8.65%.
• $200,000 for a new helicopter

The Commission retained PGE’s capital structure at 50% equity and 50% debt, approved 6.57% for cost of debt and retained the current 10.1% return on equity.

PGE last changed rates for a general rate case in March of 2007 when rates increased by 4.3%. The majority of the increase was due to the new Port Westward power plant.

Link to Commission order: apps.puc.state.or.us/edockets/orders.asp?ordernumber=08-601

Source: Oregon PUC